DCIT Non Corporate Circle 2, CHENNAI V. Tamilnadu Maritime Board, CHENNAI

ITA 344/CHNY/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1480 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 12-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R CLEMENT RAMESH KUMAR ADD
• Assessee Lawyers: S SRINIRANJANI
• Keywords: Depreciation; Set aside
• Section: 143(3); 28; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , , [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ] ./I.T.A. NOS.344 & 345/CHNY/2019 ! / ASSESSMENT YEARS : 2014-15 & 2015-2016. THE DEPUTY COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 2, CHENNAI 600 034. VS. M/S. TAMILNADU MARITIME BOARD, NO.171, SOUTH KESAVA PERUMAL PURAM, GREENWAYS ROAD, CHENNAI 600 028. [PAN AAATT 9514E] ( / APPELLANT) ( /RESPONDENT) '# $ % / APPELLANT BY : SHRI. R. CLEMENT RAMESH KUMAR, ADD. CIT. &' '# $ % /RESPONDENT BY : MS. S. SRINIRANJANI, ADVOCATE ( ) $ * /DATE OF HEARING : 10-06-2019 +,! $ * /DATE OF PRONOUNCEMENT : 13-06-2019 / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE DI RECTED AGAINST DIFFERENT ORDERS OF LD. COMMISSIONER OF INC OME TAX (APPEALS)- 2, CHENNAI (HEREINAFTER CALLED AS CIT(A)) DATED 3 0.11.2018 AND ITA NOS.344 & 345/2019. :- 2 -: 22.11.2018 RESPECTIVELY FOR THE ASSESSMENT YEARS 2 014-15 AND 2015- 2016. 2. SINCE, THE IDENTICAL FACTS AND ISSUES ARE INVOLVED IN THESE APPEALS, WE PROCEED TO DISPOSE THE SAME VIDE THIS C OMMON ORDER. 3. FOR THE SAKE OF CONVENIENCE AND CLARITY THE FACTS R ELEVANT IN ITA NO.344/CHNY/2019 FOR ASSESSMENT YEAR 2014-15 ARE ST ATED HEREIN. 4. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 THE ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW, F ACTS AND CIRCUMSTANCES OF THE CASE. 2 THE LD. CIT(A) ERRED IN GIVING RELIEF TO THE ASSESS EE BY TREATING THE IMPUGNED RECEIPT IN QUESTION AS INTERE ST FREE LOAN AND ALLOWING THE DEPRECIATION CLAIM AGAINST A SSETS ACQUIRED FROM THE SAID RECEIPT DESPITE THE TAMIL NA DU GOVERNMENT G.O. DATED 18.07.2005 CLASSIFYING IT AS GRANT. 3 THE LD. CIT(A) ERRED IN GIVING RELIEF TO THE ASSESS EE BY TREATING THE IMPUGNED RECEIPT IN QUESTION AS INTERE ST FREE LOAN AND ALLOWING THE DEPRECIATION CLAIM AGAINST A SSETS ACQUIRED FROM THE SAID RECEIPT BASED ON G.O. 22 DAT ED 03.02.2016, WHICH CHANGED THE NATURE OF RECEIPT AS INTEREST FREE LOAN, POST FACTO THE ASSESSMENT BASED ON A C & AG OBJECTION. 4 FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF TH E LD. CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER REST ORED. ITA NOS.344 & 345/2019. :- 3 -: 5. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE RESPONDENT-ASSESSEE NAMELY TAMILNADU MARITIME B OARD IS A ENTITY OWNED AND CONTROLLED BY THE GOVERNMENT OF TA MIL NADU AND ASSESSED TO TAX IN THE STATUS OF AOP. THE OBJECT FOR WHICH THE ENTITY IS SET UP IS TO DEVELOP INFRASTRUCTURE & DEVELOPMEN T OF MINOR PORTS IN THE STATE OF TAMIL NADU. THE RETURN OF INCOME FOR T HE AY 2014-15 WAS FILED ON 29.09.2014 DISCLOSING TOTAL INCOME OF RS. 2,87,28,520/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT W AS COMPLETED BY THE DY. CIT, NON CORPORATE CIRCLE-2, CHENNAI (HEREI NAFTER CALLED AO) VIDE ORDER DATED 30.12.2016 PASSED U/S. 143(3) OF T HE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT TOTAL INCOME OF H6,14,08,999/-. WHILE DOING SO, THE AO HAS NOT ALLOWED DEPRECIATION ON T HE ASSETS ACQUIRED OUT OF THE AMOUNT GRANTED BY THE GOVERNMENT OF TAMI LNADU, DISASTER MANAGEMENT AND MITIGATION DEPARTMENT VIDE LETTER DA TED 19.10.2005 RELYING UPON THE PROVISIONS OF EXPLANATION 10 TO SE CTION 43(1) OF THE ACT. IT WAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THOUGH THE AMOUNT WAS RELEASED AS GRANT AND LATTER IT WAS TREA TED AS LOAN IN TERMS OF G.O. MS.NO.22, HIGHWAYS AND MINOR PORTS (H MI) DEPARTMENT, DATED 03.02.2016, THUS IT WAS PLEADED BEFORE THE A SSESSING OFFICER THAT EXPLANATION 10 TO SECTION 43(1) OF THE ACT CAN NOT BE INVOKED. ITA NOS.344 & 345/2019. :- 4 -: 6. B EING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE THE LD.CIT(A) WHO VIDE IMPUGNED ORDER ALLOWED THE CLAIM TAKING INTO CONSIDERATION THE AG REPORT TREATING THE SAID AMOU NT AS GRANT SUBSEQUENT IN TERMS OF G.O. (MS) NO.22, DATED 03.0 2.2016, ALLOWED THE APPEAL. 7. BEING AGGRIEVED BY THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS), THE REVENUE IS IN APPEAL BEFO RE US. 8. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL REVOLVES AR OUND THE APPLICABILITY OF EXPLANATION 10 TO SECTION 43(1) O F THE ACT, WHICH READS AS UNDER:- 43. DEFINITIONS OF CERTAIN TERMS RELEVANT TO INCO ME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION IN SECTIONS 28 TO 4 1 AND IN THIS SECTION, UNLESS THE CONTEXT OTHERWISE REQUIRES- (1) 5 ' ACTUAL COST' MEANS THE ACTUAL COST OF THE ASSETS TO THE ASSESSEE, REDUCED BY THAT PORTION OF THE COST THERE OF, IF ANY, AS HAS BEEN MET DIRECTLY OR INDIRECTLY BY ANY OTHER PERSON OR AUTHORITY: EXPLANATION 1...................... 2....................... 3....................... ITA NOS.344 & 345/2019. :- 5 -: 10. WHERE A PORTION OF THE COST OF AN ASSET ACQUIRED BY THE ASSESSEE HAS BEEN MET DIRECTLY OR INDIRECTLY BY THE CENTRAL GOVERNMENT OR A STATE GOVERNMENT OR ANY AUTHORITY ESTABLISHED UNDER ANY LAW OR BY ANY OTHER PERSON, IN THE FORM OF A SUBSIDY OR GRANT OR REIMBURSEMENT (BY WHATEVER NAME CALLED), THEN, SO MUCH OF THE COST AS IS RELATABLE TO SUCH SUBSIDY OR GRANT OR REIMBURSEMENT SHALL NOT BE INCLUDED IN THE ACTUA L COST OF THE ASSET TO THE ASSESSEE : PROVIDED THAT WHERE SUCH SUBSIDY OR GRANT OR REIMBURSEMENT IS OF SUCH NATURE THAT IT CANNOT BE D IRECTLY RELATABLE TO THE ASSET ACQUIRED, SO MUCH OF THE AMO UNT WHICH BEARS TO THE TOTAL SUBSIDY OR REIMBURSEMENT O R GRANT THE SAME PROPORTION AS SUCH ASSET BEARS TO AL L THE ASSETS IN RESPECT OF OR WITH REFERENCE TO WHICH THE SUBSIDY OR GRANT OR REIMBURSEMENT IS SO RECEIVED, S HALL NOT BE INCLUDED IN THE ACTUAL COST OF THE ASSET TO THE ASSESSEE.] THE AMOUNT OF H59,35,27,237/- WAS RECEIVED FROM GOV ERNMENT OF TAMIL NADU ORIGINALLY IN THE FORM OF GRANT AND SUBS EQUENTLY IT WAS CLASSIFIED AS INTEREST FREE LOAN VIDE G.O. (MS) NO. 22, DATED 03.02.2016. THEREFORE, THIS AMOUNT CANNOT BE TREATED AS GRANT A TTRACTING EXPLANATION 10 TO SECTION 43(1) OF THE ACT. IN THE CIRCUMSTANCES, THE ORDER OF THE LD. CIT(A) IS BASED ON THE PROPER APPR ECIATION OF EVIDENCE ON RECORD. WE DO NOT FIND ANY PERVERSITY IN THE FI NDINGS OF THE LD. CIT(A). THEREFORE THE APPEAL FILED BY THE REVENUE IN ITA NO.344/CHNY/2019 FOR ASSESSMENT YEAR 2014-15 IS DISMISSED. ITA NOS.344 & 345/2019. :- 6 -: ITA NO.345/CHNY/2019 FOR ASSESSMENT YEAR 2015-16. 9. SINCE, THE FACTS IN THE PRESENT APPEAL IS IDE NTICAL TO THE FACTS IN ITA NO.344/CHNY/2019, FOR THE REASONS MENTIONED THEREIN, WE DISMISS THE APPEAL FILED BY REVENUE ON THE SAME L INES INDICATED IN APPEAL ITA NO.344/CHNY/2019 SUPRA. HENCE, THE ABOVE CAPTIONED APPEAL FILED BY THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IN ITA NOS. 344 & 345/CHNY/2019 FOR ASSESSMENT YEARS 2014-15 AN D 2015-2016 ARE DISMISSED. ORDER PRONOUNCED ON 13TH DAY OF JUNE, 2019, AT CHE NNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER - ) / CHENNAI . / DATED:13TH JUNE, 2019. KV $ &*01 21!* / COPY TO: 1 . '# / APPELLANT 3. ( 3* () / CIT(A) 5. 16 &*7 / DR 2. &' '# / RESPONDENT 4. ( 3* / CIT 6. 8 9) / GF